Paying farmers to bring terraces back

The challenge

Madeira's terraces, the socalcos, were built by hand over centuries on slopes too steep for machines. They hold soil, water and the landscape that tourism and the island's identity rest on. Everyone benefits from them, but only the farmer pays to keep them. When a plot is abandoned, the walls fail and the soil erodes.

The usual answers are rules and one-off subsidies. They tell landowners what to do, but they don't make it worth doing. The brief was to design something farmers would choose: a mechanism that recognises the value they create and pays them for it.

Our approach

We started in the field rather than with the mechanism. We wanted to understand why terraces are abandoned before designing anything to bring them back.

• Discovery interviews with producers, agronomists, technical staff, consortium partners and researchers.
• Pain Card workshops where participants named and ranked what stops them maintaining land.
• A literature review of more than 200 sources on terraced landscapes, payments for ecosystem services and tokenised incentives.
• Friction analysis to find where effort goes in and value fails to come back out.

Every interview was synthesised in Portuguese and English, so the whole consortium could work from the same evidence.

What we found

We mapped five separate pain points as systems maps. All five ended at the same missing piece: nothing links the real value of a working terrace to what the system recognises and pays for.

We also found a cycle we called the production trap. Terrace farming takes intensive labour, yet the farmer can't capture that effort in the price of what they sell. More work does not lead to more income, which makes abandonment a rational choice.

The solution

The research changed the mechanism from a payment for upkeep into a payment for progress. The first phase rewards measured soil regeneration, because measurable improvement is what justifies funding the next phase.

• Phase 1: regenerate soil, and pay for measured progress.
• Phase 2: help farms produce the same output at lower cost and better quality.
• Phase 3: study more production, only once the market can absorb it without prices falling.

Where it stands

The project is in validation. We are testing the proposition with farmers before anyone builds a payment system. Success is defined up front and measured against a baseline we are setting now:

• Area of poor soil regenerated within a set period
• Number of farmers who lower their costs, and by how much, over three years
• Soil quality per parcel, tracked by the consortium's own measurement system